lec7 - 2010-03-18 Applying Model of Consumer Behavior...

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2010-03-18 1 ECON201 Consumer Behavior Decomposition Applying Model of Consumer Behavior (chapter 3) Working with non-linear budget constraints Understanding how consumer demand is affected by a change in prices is affected by a change in Understanding how consumer demand is affected by a change in income Chapter 4: Really understanding how consumer demand is affected by a change in Effect of Changes in Income on Demand Q AOG e 1 e 0 50 100 Normal Good: A good for which more units are consumed as income Normal Good Engel curve Restauran t meals Restaurant meals Income 4 50 2 4 100 25 1 0 Effect of Changes in Income on Demand Q AOG 50 100 Inferior Good: A good for which fewer units are consumed as income Inferior Good e 0 e 1 Spam Spam Income 50 30 10 100 50 100 Engel curve 30 10 Applying Model of Consumer Behavior (chapter 3) Working with non-linear budget constraints Understanding how consumer demand is affected by a change in is affected by a change in Understanding how consumer demand is affected by a change in understanding how consumer demand is affected by a change in
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lec7 - 2010-03-18 Applying Model of Consumer Behavior...

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